The two players, both redshirt freshmen, were booked at Tippecanoe County Jail after police were called about suspected shoplifting at a Kohl's department store, according to the report.
Purdue associate athletic director Tom Schott told the newspaper that the football program would let the legal process "evolve" before deciding punishment.
Knauf has caught nine passes for 95 yards and rushed for 90 yards on 11 carries this season. Woods has not appeared in a game.
Both players posted bond and were released by Monday night, according to the report.